Policy Exchange calls on government to rethink broadband priorities

The government needs to focus less on achieving superfast broadband speeds, and more on ensuring that most people have access to a basic level of broadband connectivity, according to a report by Policy Exchange.

The report argues that "speed should not be the primary lens for broadband policy" and calls on the government to focus "explicitly on economic and social outcomes rather than pursuing speed as a proxy for progress."

During a panel debate on the report, "The Superfast and the Furious" which sets out priorities for the future of broadband policy in the UK, Ed Vaizey, Minister for Culture, Communications and Creative Industries, said that 2013 will be "the year of delivery".

He pointed to projects such as the 4G spectrum auction and the rural broadband programme as examples and said that "it’s clear the UK’s internet economy is in rude health, accounting for one in every ten pounds produced every year". Vaizey also cited the 2012 landmark of digital download sales passing the £1bn mark and called on providers and government to continue working together to achieve the government’s aim of the UK having the best superfast broadband network in Europe by 2015.

Vaizey finished by saying, "Broadband and the internet economy is in a very good place as we enter 2013. Coverage is increasing, the UK consumer has a good level of choice and the internet and digital economies are at the heart of the UK’s growth strategy."

Chris Yiu, one of the papers’ authors, said that the internet accounts for a higher share of the UK economy than in any other G20 country and is now responsible for about a quarter of our economic growth.

However, Yiu pointed out polling conducted by Ipsos Mori on behalf of Policy Exchange which found that "for the general public, broadband price and reliability matter as much as raw speed". The survey also found that "four in five people think the internet is something that everyone should be able to get access to" and that "two thirds of people think it is more important for everyone to have access to a basic broadband service than it is to boost top speeds in select parts of the country."

He said the government should focus on three things: "how much broadband matters to the UK, the importance of shifting the discussion from supply to demand, and achieving universality of service."

Yiu pointed to Francis Maude’s comment last year that "data is the new raw material of the 21st century", saying that if data is raw material, the internet is the infrastructure. According to his research, for consumers, "speed matters, price matters, reliability matters", and "the message to small businesses is that the internet can help uncover the level of true demand in the economy". The answer, he said, "has to be more competition and innovation…and the freedom for business to deploy infrastructure."

Regarding the report’s central point, that broadband access merits as much attention as speed, Yiu pointed to "the final ten percent"- his phrase for the 8m UK adults who have never used the internet. He agreed with survey data which found that "most of those we polled think that everyone should be able to access the internet", saying, "we need to find a better way of thinking about universal service and how to spend money in a way that makes the biggest difference."

He cautioned that it is unfair for users in remote areas to pay more, but admitted that "it is a difficult area for politicians to navigate as opinion is divided 50/50 over a number of issues". For example, the report found almost equal agreement and disagreement when respondents were asked whether they’d tolerate masts, street cabinets and overhead lines in the vicinity of their homes for the sake of faster broadband speeds.

Dido Harding, chief executive of TalkTalk, praised the report’s headline vision, adding, "We in the UK are already good at the internet- but we could be great."

Regarding accessibility, she said, "As a country we can’t just wait for everyone who isn’t online to die. It’s hard to work out why some people aren’t online, yet there are 8m adults in the UK who have never accessed the internet. However, it can transform their lives: by being online, they are able to do things like order repeat prescriptions and connect more with the physical world too."

Harding expressed concern over the statistic that a third of SMEs can’t sell products online, saying that "this is the easiest way for businesses to grow".

She added, "If we build the infrastructure, we cannot just assume that people will come along and use it", pointing to statistics that 95% of homes and businesses in Northern Ireland have access to superfast broadband, yet as a UK region it contains one of the highest proportions of adults who have never accessed the internet.

Harding said, "There’s lots of work for all of us to do to get people to acquire the skills and confidence to use the internet, especially the elderly."

She added that consumers and businesses need to more easily be able to switch between broadband providers to encourage competition for BT and Virgin, which currently account for 95% of the market. "We currently have a market where switching doesn’t happen very much. The incumbents love that as they like avoiding churn. But the reality is we need to make switching as easy as possible. If we really want to drive a great digital economy we need more providers and it needs to be easier to switch between them."

"In the next ten years I’m confident that we’ll become a country where everyone is online, and there are great opportunities associated with that."